• Register
Return to: Home > News > Assurance for SMEs: Is there any evidence of its value?

Assurance for SMEs: Is there any evidence of its value?

Cowperthwaite : "If there was ever a formula for disaster, it is to send a junior auditor to a junior accountant and expect to get something of value" [photo: WCOA 2014]

While regulators are lifting the audit thresholds around the world, SMEs still see the access to funding as a challenge. This raises the issue of the value of assurance services for SMEs and the role of accountants in offering, or not, these services.

At the World Congress of Accountants (WCOA) an international panel chaired by ACCA External Affairs Director Sue Almond looked at this changing environment and the different approach in terms of audit and assurance for SMEs in light of cultural and legislative differences form one country to another.

Sue Almond: Not only does the practice of assurance services vary around the world but the practices around audit vary around the world, Philippe can you talk about the French specificity?

Conseil Superieur de l'ordre des Experts-Compables vice-president Philippe Arraou:
There is a good history and practice of auditing SMEs in France. We have a vast number of SMEs which are audited. And we have two kinds of profession in France providing services to SMEs: the chartered accountant (CA) who advices and the auditor who audits. CAs are different than auditors. The French regulation is made in a way that both aspects: advising and comparing financial statements, and auditing and delivering an opinion need to be regulated. But we consider that they are two different assignments: the financial statement is prepared by a professional according to accounting standards and then the role of the auditor is limited to delivering an opinion on this financial statement. There are different roles but complementary of course.

IFAC Small and Medium Practices Committee (SMPC) member Stuart Black (Australia): If one chooses that we need to have audits, it is another aspect to say how do you provide advice and audit independently. To my mind there is no evidence anywhere in the world that shows that the countries that don't have audit for the SMEs have greater failure than countries that do have audit.
The French aspect makes sense if you have a regulation that says you need to have an audit, then you can break the independence question. But to be frank in my view it ignores the question of why do you need an audit for an SME. Is there any evidence that there is value? I find it very difficult and therefore hard to sell it to clients.

IFAC SMPC member Phil Cowperthwaite (Canada): You can have a bookkeeper, one accountant, two accountants or three or four, but what I see is that when a micro entity wants to have an audit or a review, the audit firm sends out their least qualified person. So this person has no understanding or experience in assurance and audit review, and they are sent out to a client that has no real understanding of accounting.
If there was ever a formula for disaster, it is to send a junior auditor to a junior accountant and expect to get something of value.
I don't really know if you need one, two, three or four accountants. For the really small clients you have to send out senior people on the job, on site, talking to your clients having direct communication.

Den Norske Revisorforening (The Norwegian Institute of Public Accountants) CEO Per Hanstad: In addition to having very good and efficient people, we could have a product that is fit for the client. One of the problems today is that we try to sell a product, to small companies, which is absolutely not fit for purpose at all. As long as you try to sell an audit the same way as to the biggest companies or multinationals you will lose. We need to look at the standards because the product that we are delivering today is not the right one it is not tailored to the needs of the SMEs.

Read the full report here:
To audit or not to audit, that is the question

Top Content

    ARGA team, assemble!

    The new top team has been named that will see in root-and-branch reform at the Financial Reporting Council (FRC) as it transforms into the Audit, Reporting and Governance Authority (ARGA). Will the new duo be as dynamic as some are hoping? Robin Amlôt reports.

    read more

    FASB: a quest for simpler standards

    FASB chair Russell Golden addressed the IMA 2019 Annual Conference and Expo at the Sheraton San Diego Hotel and Marina, California, on 18 June. IMA immediate former chair-emeritus Alex Eng acted as moderator. Joe Pickard reports.

    read more

    The future of audit, and how to get there

    Two recent reports peer into the future of the audit profession. One analyses what an audit should offer, while the other looks at how the audit process will be carried out. Robin Amlôt takes a closer look at both.

    read more

    EFAA elects new president, focuses on digital future

    EFAA’s new president, Salvador Marin, outlined his key priorities for the next two years at the organisation’s 2019 annual general meeting, while outgoing president Bodo Richardt offered advice. Robin Amlôt reports.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.